Lee took 8 billion won while in office

Warrant application reveals charges against the former president

Mar 22,2018

Former President Lee Myung-bak took at least 8 billion won ($7.5 million) in bribes while he was in office, according to a warrant application submitted by prosecutors on Monday to detain the former president for further investigation.

The Seoul Central District Court initially planned to hold a warrant hearing today but postponed it because of Lee’s continued insistence that he will not sit through the hearing. The former president faces a wide range of corruption charges and has denied all of them.

On Wednesday, the court said it would make a decision today on whether to hold the hearing without Lee, compel Lee to attend or review the warrant request without a hearing.

Lee, who served as president from 2008 to 2013, faces at least 18 criminal charges for receiving bribes from businessmen and politicians, misappropriating money for secret operations at the country’s main spy agency and raising slush funds using DAS, an auto parts manufacturer registered under his family’s name.

While Lee has denied that he is the actual owner of DAS, the warrant application argues that he was in charge of the company’s operations during his time as president of Korea.

Lee made decisions on ownership transfers and dividend payments, and was responsible for making Samsung Electronics pay DAS’s expensive legal bill when it was pursuing a lawsuit in a U.S. court, prosecutors said.

In the case of dividend payments, prosecutors argued Lee was directly involved in decisions on the amount since the company began paying out to shareholders in 2011.

In the case of Samsung, DAS was pursuing a lawsuit in a U.S. court to retrieve a 14 billion won investment it made in a failed venture owned by a Korean-American. Samsung Electronics paid $125,000 a month to Akin Gump Strauss Hauer & Feld LLP for DAS’s legal representation from November 2007 to November 2011. A majority of those payments were made while Lee was president, allegedly in return for a pardon of the Samsung chairman who was convicted of tax evasion.

“After Lee was briefed by Kim [Baek-jun, a senior aide,] in March 2008 about Samsung’s decision to pay for the legal fees, he smiled brightly and approved of it,” prosecutors said in their warrant application.

Lee also prepared a plan to transfer a 5 percent stake in DAS to his son, Lee Si-hyung, to prepare for his life post-presidency, but it was never actually carried out, prosecutors said.

The warrant application details a series of alleged schemes aimed at protecting the Lee family’s wealth for the past 30 years, beyond just those committed during his presidency. Prosecutors said the criminal acts and evidence destruction began after Lee left Hyundai Group and started his political career in 1992.

“He started raising money independently and created a security network using his family and relatives for bigger ambitions, such as becoming mayor of Seoul and eventually president,” a source in the prosecution said.

The history of DAS traces back to an engineering firm that Lee established in 1987 with 396 million won in capital at the recommendation of then Hyundai Motor Chairman Chung Se-yung.

The firm later changed its name to DAS, and Lee used the company to create a 34 billion won slush fund over 12 years starting from January 1994, prosecutors argued in their warrant application.

They also said Lee owned about 10 pieces of real estate under other people’s names.

“These are violations of the Public Servants Ethics Act and Public Officials Election Act,” the warrant application read. “They are charges grave enough to invalidate Lee’s presidential election victory.”

When an independent counsel launched a probe into his suspected financial crimes in January 2008, just before his inauguration, Lee allegedly conducted mock interrogation sessions with his lawyers to practice delivering a false testimony, prosecutors argued. Lee was cleared in that probe.

After winning the election, Lee, with his close associates, including senior aide Kim, allegedly discussed taking bribes from mid-size companies with financial issues, rather than conglomerates, because they would be less noticeable.

Sungdong Shipbuilding, a company on the verge of bankruptcy, allegedly paid about 1.9 billion won to Lee Myung-bak through Lee Pal-sung, then chairman of Woori Financial Group with no relation to the president. Lee is suspected of receiving money from other small companies.

Prosecutors believe the Supreme Prosecutors’ Office’s 2006 probe into slush funds at Hyundai Motor Group served as a turning point for Lee’s secret asset management. Lee, who was mayor of Seoul at the time, ordered DAS in March 2006 to stop sending him slush funds through the manipulation of accounting records, prosecutors said.

“Lee was worried that the prosecution’s probe into Hyundai Motor’s slush funds and the Seoul Metropolitan Government’s alleged favors to help the company build its headquarters would reveal his own slush funds,” prosecutors argued in their warrant application based on testimony by former DAS executives.

“In 2006, Lee ordered his associates to stop creating slush funds because he had a big dream,” a source in the prosecution said. “It is shocking that Lee committed more crimes after he won the election and while he was president.”

Lee served in the National Assembly from 1992 to 1998. He was elected mayor of Seoul in 2002 and served until 2006. After his mayor tenure ended, he ran for presidency and won the election in 2007.

“Of the 11 billion won in bribes that Lee allegedly took, 8 billion won was given to him when he was president,” the source said.